Working Papers

"The Capital Purchase Program's Effect on Firm Dynamics over the Business Cycle" [Job Market Paper]

Following the 2008 Financial Crisis the Capital Purchase Program dispersed over \$200 billion dollars to banks hoping to prevent foreclosure and ease tightened lending conditions. Using census data on county level business dynamics this paper estimates the impacts of the Treasury Department's Capital Purchase Program on establishment entry, establishment exit, employment expansion, and employment contraction following the 2008 Financial Crisis. We estimate the direct effects of a county having a bank receive Capital Purchase Program funds on local business dynamics in the seven years following treatment, as well as spillover effects as entrepreneurs and business in neighboring regions travel to gain access to credit. Estimates show the CPP had no effect on establishment entry and exit, nor employment expansion and contraction. This paper establishes that the business-lending aims of the CPP were not realized in the communities and regions that received funds, and casts further doubt on meaningful pass through of CPP funds to desirable local economic activity. Working Paper

"Linear Hypothesis Tests for Fixed Effects with Serially Correlated Panels"

I develop a joint hypothesis test over fixed effects in large n small T panel data models with symmetric serial correlation among individuals. This enables joint hypothesis tests over inconsistent fixed effects estimates, including the traditional varying intercept model as well as models with individual specific slope coefficients. I establish two different set of assumptions where a feasible tests exist. The first assumption requires that individual errors follow a stationary $\ARp$ process. Under this assumption all second and fourth cross product moments can be consistently estimated, while allowing for both individual specific hypothesis to be imposed on the data and covariates to vary across individuals and time with individual specific slopes. The second set of assumptions requires the presence of a known group structure of individuals such that there are at least two people in each group, and that the covariate values and coefficient slopes are shared among all individuals in that group. This set of assumptions enable estimation of a completely unconstrained variance-covariance matrix and higher cross product moments for individuals. Preliminary Working Paper

"Do Nudges Induce Safe Driving? Evidence from Dynamic Message Signs" with Sher Afghan Asad

This paper estimates the causal impact of messages displayed on dynamic message signs adjacent to roads on reported near-to-sign crashes and crash severity. We match accident reports to displayed messages using minute level time and location metrics, along with hourly data on traffic and weather conditions in the state of Vermont from June 2016 through the end of 2018. We evaluate the impact of safe driving messages (behavior messages) differently than those that provide information about current or future road or weather conditions (information messages), and evaluate their impact both on the number and severity of crashes. Using a mixture of difference-in-difference, regression discontinuity, and ordered logit, we show that these messages do not causally impact the probability of drivers getting into a crash, nor the severity of the crash, measured by both number of vehicles involved in an accident or whether or not an accident induced an injury or fatality. While these signs and messages are popular and may lower mental burden of traveling they do not improve road safety as categorized by either number of accidents nor accident severity. Working Paper

Published Papers

"How Relative Marginal Tax Rates Affect Establishment Entry at State Borders" with Yulong Chen, Liyuan Ma, and Peter Orazem, forthcoming at Small Business Economics.

Previously circulated as "Impacts of Taxes on Firm Entry Rates along State Borders" with Georgeanne M. Artz and Peter F. Orazem

This paper studies the impact of marginal capital income, property, sales, and income tax rates on establishment entry. We apply border discontinuity analysis and test relative establishment entry rates in the same industry on either side of state borders. Establishments are significantly more likely to enter on the side of the border with the lower marginal tax rates with property taxes being the most important. Results are used to identify the largest border differences in start-ups due to tax structure and to rank the most distortionary tax structures overall. The greatest distortion in start-ups due to tax rates is at the Wyoming-Idaho with 8.6% lower probability of start-ups on the Idaho side due to tax disadvantages relative to Wyoming. The most distortionary tax structure is Rhode Island’s at 14.2% lower probability of entry, but it is not as heavily disadvantaged at the border because its neighbor, Connecticut, has the third most distortionary tax structure. Working Paper // Previous Version Working Paper

"Do State Business Climate Indicators Explain Relative Economic Growth at State Borders?" with Georgeanne M. Artz, Kevin D. Duncan, Arthur P. Hall, Peter F. Orazem; Journal of Regional Science, Volume 56 Issue 3; June 2016; Pages 395-419

This study submits eleven business climate indexes to tests of their ability to predict economic performance on either side of state borders. Our results show that most business climate indexes have no ability to predict relative economic growth regardless of how growth is measured. Some are negatively correlated with relative growth. Many are better at reporting past growth than at predicting the future. In the end, the most predictive business climate index is the Grant Thornton Index which was discontinued in 1989. Working Paper // Published Version